Question 3 (7 Marks)
International trade can be explained by a number of models to explain the benefits of trade for nations. Use the case study provided to you to answer the questions that follow.
- Examine the relevance of the following theories to explain the reasons why Coca Cola and other multinational enterprises trade internationaly.
- Absolute Advantage 2 marks
- The Ricardian Model 1 mark
- The Heckscher-Ohlin Model 1 mark
- Examine the differences between the theory of Absolute Advantage and Comparative advantage. 1 mark
- Explain the main disadvantages of the theory of comparative advantage. 2 marks